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FPStandard

SPRING 2014 ISSUE 9

IDEAS THOUGHTS AND TRENDS IN THE FINANCIAL PLANNING PROFESSION

P1 On My Mind: What it Means to be “Gold”

P3 The Force of Emotional Intelligence

P4 Value of CFP® Certification Study

P7 Sudbury Woman Named Western Hemisphere's Best Financial Planner

fpsc.ca


BY THE NUMBERS

CANADIAN AWARENESS STUDY A RECENT NATIONAL OMNIBUS STUDY CONDUCTED BY LEGER RESEARCH INTELLIGENCE GROUP ON BEHALF OF THE COALITION FOR PROFESSIONAL STANDARDS FOR FINANCIAL PLANNING REVEALS THAT, WHILE MANY CANADIANS FEEL THEY HAVE INSUFFICIENT KNOWLEDGE TO ADEQUATELY PLAN THEIR FINANCIAL FUTURE, THEY ARE ALSO UNAWARE OF THE LACK OF LEGISLATIVE PROTECTION REGARDING WHO CAN HOLD THEMSELVES OUT AS FINANCIAL PLANNERS.

60

%

OF CANADIANS FEEL THEY DO NOT HAVE THE NECESSARY KNOWLEDGE TO ADEQUATELY PLAN THEIR FINANCIAL FUTURE AND ADMIT THEY WILL NEED PLANNING ASSISTANCE.

Almost

67

%

OF THOSE LIVING IN ATLANTIC CANADA BELIEVE THERE IS NO DIFFERENCE BETWEEN A FINANCIAL PLANNER AND A FINANCIAL ADVISOR.

Canadians

1/2 <55 OF CANADIANS THINK THERE ARE REGULATORY STANDARDS IN PLACE FOR FINANCIAL PLANNERS.

years old

WITH CHILDREN AND WITH HIGHER THAN AVERAGE HOUSEHOLD INCOME ARE PARTICULARLY INTERESTED IN RECEIVING HELP TO PLAN THEIR FINANCIAL FUTURE.

902-375 University Avenue Toronto, Ontario M5G 2J5 Telephone: 416 593 8587 Toll-Free: 1 800 305 9886 Email: inform@fpsc.ca Website: fpsc.ca Twitter: @FPSC_Canada Facebook: FPSC.Canada LinkedIn: company/Financial-PlanningStandards-Council

ABOUT THE COALITION FOR PROFESSIONAL STANDARDS FOR FINANCIAL PLANNING The Coalition for Professional Standards for Financial Planning, which came together in 2009, is comprised of four organizations concerned about ensuring there are appropriate mandatory professional standards for financial planners to adequately serve Canadians' financial planning needs. Coalition members include Financial Planning Standards Council (FPSC), Canadian Institute of Financial Planners (CIFPs), Institute of Advanced Financial Planners (IAFP) and Institut québécois de planification financière (IQPF). Each Coalition member organization has a mandate that supports professional standards in financial planning, is committed to serving the public interest, and engages in education, certification and/or oversight of financial planners.

YouTube: FPVision2020 CFP®, Certified Financial Planner® and are certification trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. All other ® are registered trademarks of FPSC, unless indicated. © 2014 Financial Planning Standards Council. All rights reserved.


ON MY MIND

WHAT IT MEANS TO BE “GOLD”

In Canada, outside of Quebec, anyone can call themselves a financial planner. Since 1995, Financial Planning Standards Council has established and enforced standards to determine who meets the requirements to be a Certified Financial Planner® professional in Canada. FPSC can attest to the fact that every individual who earns the CFP designation has achieved the “gold standard” in financial planning qualification in Canada.

results of a recent international study on the value of hiring CFP professionals and the financial services industry’s future intentions in supporting, enlisting and retaining CFP certificants in their firms.

But what does it mean to be “gold”?

As a self-regulated profession, we have a duty to ensure that the standards that we have set for ourselves are continuously questioned, assessed and strengthened. We do this on behalf of the Canadian public to protect their increasingly challenged financial futures.

The value that Certified Financial Planner professionals bring to their clients is clearly centered on their ability to take into account all aspects of an individual’s financial life when providing financial advice. This echelon of professionalism requires both expert technical know-how and, I would argue just as importantly, finely tuned emotional intelligence. It is through this combination of skills that CFP professionals are truly able to relate to clients.

With this in mind, FPSC will host two symposiums during Financial Planning Week 2014—one in Toronto on November 19 and the other in Vancouver on November 21. We look forward to these gatherings of CFP professionals from across the country to explore topical issues related to trust, communication, performance and professionalism, with an overarching eye on the future of the financial planning profession and what it means to be on top.

Cary List CA, CPA, CFP® President & CEO, FPSC Cary leads FPSC as the premier standardssetter for financial planning in Canada. He has spent most of the past decade elevating the standards for and acceptance of the CFP designation as the gold standard for financial planning and working to see financial planning recognized in law as a distinct profession.

In this edition of FP Standard, we have reached out to leading experts who weigh in on the definition of emotional intelligence and its application in the financial planning profession. We also reveal the Canadian

SPRING 2014 – 1


A GREATER RETURN ON LIFE™

TOWARD A MORE ENDURING VALUE PROPOSITION BY MITCH ANTHONY PRESIDENT, ADVISOR INSIGHTS INC.

Mitch Anthony is the founder and president of Advisor Insights Inc. (the parent company of MitchAnthony.com, The Financial Life Planning Institute, PracticeTools.net, NewRetirementality.com, and Insights Press). For more than a decade, Mitch and his team have provided training and development for both individual advisors and major organizations throughout the world. Mitch personally consults with many of the largest and most-recognizable names in the financial services industry on both financial life planning and relationship development. mitch@mitchanthony.com

THE EXISTING ROI (RETURN ON INVESTMENT) VALUE PROPOSITIONS OF PROVIDING FINANCIAL PLANNING/ASSET MANAGEMENT AND RECOMMENDING FINANCIAL PRODUCTS TO ACHIEVE RETURNS ARE UNDERGOING RAPID COMMODITIZATION. IT IS INCREASINGLY DIFFICULT FOR ADVISORS TO DIFFERENTIATE THEMSELVES IN A CROWDED, "ME TOO" MARKETPLACE OR TO LIVE UP TO THE UNREALISTIC EXPECTATIONS FOLDED INTO THE ROI APPROACH. THE FIRST STEP IN THE PROCESS OF TRANSFORMATION IS TO CONFRONT THE SHORTCOMINGS OF THIS APPROACH AND FREE OURSELVES FROM THE CHAINS OF AN OUTDATED MODEL THAT FRUSTRATES MANY ADVISORS:

Performance: Always striving for a higher rate of return than competitors or indexes. Prognostication: Trying to predict the future of markets or the economy. Timing: Continually helping clients avoid falling asset classes while capitalizing on emerging opportunities. The consequences of this approach are manifold and erode the life and business of the advisor. If any of the following statements describe you, you are at risk: 1. You need to constantly prove your worth. 2. You are blamed for events and forces beyond your control. 3. You are perpetually compared to competitors and indexes. SPRING 2014 – 2

4. You are wrong in your predictions. 5. You have to cope with clients who hold back information and assets 6. You have too many clients. 7. You do not have enough time in your day to balance commitments. Introducing the Return on Life (ROL) Revolution: “My job is to help you get the best life possible with the money you have.” The approaches promoted in the past are no longer enough to convince clients to entrust their hard-earned assets to advisors who cannot assure them a better future. Clients are looking for professionals who will keep the promises they make, and the profession is seeking a value proposition it can fulfill. The answer is no longer based on predicting the markets, guaranteeing returns, or outpacing competitors but rather on building a life-centered financial practice. Four Primary ROL Val-YOU Propositions: Organization: We will help bring order to your financial life. Accountability: We will help you follow-through on commitments. Objectivity: Insight from the outside to help you move away from emotionally driven decision-making. Pro-activity: We will help you anticipate and be financially prepared for life transitions.

Each quantum leap by the industry has introduced new disciplines into the financial discussion. In the shift from sales transactions to asset management and asset allocation, risk profiling tools were introduced. In the move from asset management to financial planning, probability analysis, goals inquiry, and broader discovery tools were introduced into the discussion. In the leap forward into ROL planning, life-transition tracking tools, financial satisfaction, and fiscal philosophy tools have and continue to be adopted to help clients merge their money and lives. A new focus: Transitions not transactions. As clients' lives change, the ROL advisor will be there to help address the accompanying financial challenges and opportunities. A new stability: A life-centered value proposition is the only stable anchoring point for the advisor in an environment of rapid commoditization. "If you help me navigate financially through life, make the most of my life, and are focused on what matters to me, then your value will most certainly eclipse the price paid for it." When you are confident in the value you bring, there will be no reason for reacting timidly to the idea of absolute transparency. Advisors practicing ROL are in the enviable position of being able to make promises they can keep, to a manageable number of clients. The results are trust magnified, a more balanced life, and clients who are thrilled with the arrangement.


“THE FORCE” OF EMOTIONAL INTELLIGENCE BY ED DUNKELBLAU, PH.D., DIRECTOR, INSTITUTE FOR EMOTIONALLY INTELLIGENT LEARNING AND MAURICE ELIAS, PH.D., PROFESSOR OF PSYCHOLOGY AND INTERNSHIP COORDINATOR, DIRECTOR OF CLINICAL TRAINING, PH.D. PROGRAM IN PSYCHOLOGY, AT RUTGERS UNIVERSITY, NEW JERSEY.

EMOTIONAL INTELLIGENCE—ALSO KNOWN AS SOCIAL-EMOTIONAL LEARNING (SEL)—IS A SET OF ESSENTIAL HUMAN COMPETENCIES THAT HAVE BEEN EMPIRICALLY LINKED TO ACADEMIC AND BUSINESS SUCCESS. INDIVIDUALS WITH SEL SKILLS ARE BETTER ABLE TO APPRECIATE THE SITUATIONS OF PEOPLE WITH WHOM THEY WORK, THEIR DESIRES, FEARS AND FOIBLES, AND THEY ARE ALSO BETTER ABLE TO FORM LASTING RELATIONSHIPS THAT ENGENDER TRUST AND CONFIDENCE.

What are these skills? They are typically grouped into four areas:

• Showing sensitivity to social cues • Exercising social decision making

Self-awareness

• Responding constructively and

• Recognizing and naming one’s emotions • Understanding of the reasons and

and problem solving skills in a problem solving manner to interpersonal obstacles

4. One of the foundations of emotional competence—accurate self-assessment—was associated with superior performance among several hundred managers from 12 different organizations.

circumstances for feeling as one does

Self-regulation

• Verbalization and coping with anxiety,

anger and depression • Controlling impulses, aggression, and

self-destructive, anti-social behaviour • Recognizing strengths in and mobilizing

positive feelings about self, work and supportive networks

Self-monitoring and Performance • Focusing on tasks at hand • Setting short and long term goals • Modifying performance in light • • • • • •

of feedback Mobilizing positive motivation Activating hope and optimism Empathy and perspective taking Becoming a good listener Increasing empathy and sensitivity to others Seeing the world through another’s “eyes”

Social Skills in Handling Relationships

• Managing emotions in relationships,

harmonizing diverse feelings and points of view • Expressing emotions effectively • Exercising assertiveness, leadership and persuasion • Working as part of a team

As you review this list, consider which skills are particular strengths of yours, and which ones you might benefit from improving. Maximizing your SEL abilities can make a very large difference in your career success. Here are some examples from the evidence (more details can be found at EIConsortium.org): 1. In jobs of moderate complexity (e.g. sales, mechanics), a top performer is 12 times more productive than those at the bottom. In most complex jobs (e.g. account managers), a top performer is 127% more productive than an average performer. 2. At a large cosmetics company, salespeople selected on the basis of emotional competence had 63% fewer turnovers during the first year than those selected in the typical way. 3. Research for the Centre of Creative Leadership found primary causes of derailment of managers involved deficits in emotional competence. They identified three major deficits: a) Difficulty in handling change. b Not being able to work well on a team. c) Poor interpersonal relations.

5. Financial advisors at American Express whose managers completed their Emotional Competence training program were compared to an equal number whose managers had not. During the year following training, the advisors of trained managers grew their businesses by 18.1% compared to 16.2% for those whose managers were untrained. No less of an authority than Yoda said, “Your focus is your reality”. You can make a difference in your career, your earnings, in your effectiveness with others, even in clients’ and students’ willingness to think expansively about their financial possibilities, if you choose to focus on improving your SEL skills. Whether it is empathy, goal-setting, handling relationships, or persisting creatively in the face of obstacles, the skills you gain translate into workplace success. May the Force be with you!

SPRING 2014 – 3


VALUE OF CFP® CERTIFICATION STUDY

INSIGHTS INTO HOW FIRMS VALUE CFP CERTIFICATION IN CANADA FINANCIAL PLANNING STANDARDS COUNCIL RECENTLY PARTICIPATED IN AN INTERNATIONAL STUDY CONDUCTED ON BEHALF OF THE FINANCIAL PLANNING STANDARDS BOARD LTD. (FPSB) BY COMPARATOR, AN AUSTRALIAN BENCHMARKING ORGANIZATION WITH MORE THAN 10 YEARS’ EXPERIENCE IN WEALTH MANAGEMENT AND FINANCIAL ADVICE BENCHMARKING. TWELVE COUNTRIES INCLUDING CANADA PARTICIPATED IN WHAT WAS DEEMED THE GLOBAL “VALUE OF CFP CERTIFICATION” STUDY. A TOTAL OF 114 FINANCIAL SERVICES FIRMS PARTICIPATED IN THE SURVEY. THE FOLLOWING IS A SUMMARY OF THE CANADIAN RESULTS.

Employment longevity and career advancement

Firms support attainment and maintenance of CFP certification

78% of firms reported that CFP professionals average longer terms of employment compared to advisors and planners who do not hold the CFP designation.

Advisors are well supported by their firms to achieve AND maintain CFP certification with 78% of firms contributing financially to advisors pursuing and maintaining CFP certification (56% pay all costs, 22% pay for some costs).

64% of the firms surveyed offer rewards to advisors attaining CFP certification.

36%

22%

18%

27%

18%

Yes, 78% 56%

22%

Rewards offered: 27% offer salary increase (16% average)

Q: Do CFP professionals achieve higher rates of career advancement than those who do not hold the designation?

18% offer cash / bonus (8% average) Pay for all costs associated with CFP certification Pay for some of the costs associated with CFP certification

Yes, 100%

SPRING 2014 – 4

Do not contribute financially

18% offer non-monetary benefits 36% do not offer rewards


Firms intend to grow the number of CFP professionals in their organizations Over the next 12 months, the majority of firms plan to grow the number of CFP professionals.

50% 43%

7%

Profitability

Client Satisfaction

• CFP professionals (in general) generate

89% of firms indicated that employing CFP professionals had a positive impact on clients’ satisfaction with the firm and that employing CFP professionals led to increased client retention.

higher profit according to 63% of firms… • … with 63% of firms also indicating an increase in their business profitability from CFP professionals, compared to those without CFP certification.

Q: Has employing CFP professionals had a positive impact on your clients’ satisfaction with the firm?

Increase by hiring new advisors/ planners Increase by supporting existing advisors/ planners

Yes, 63% vs. No, 37%

No increase

Over the next three years, all firms plan to grow the number of CFP professionals.

50% 50%

Increase by hiring new advisors/ planners Increase by supporting existing advisors/ planners

Compliance and Risk Management Q: Do CFP professionals present lower compliance and legal risks compared to those who are not certified?

Yes, 75% vs. No, 25%

Productivity • CFP professionals are more

productive, according to 67% of firms surveyed… • … and 63% of firms indicate that they have a higher rate of growth of assets under management, compared to those without CFP certification.

Revenue Generation

Yes, 89% vs. No, 11%

Q: Has employing CFP professionals led to increased client retention?

Yes, 88% vs. No, 12%

Differentiation Q: Do CFP professionals have fewer complaints against them compared to those who are not certified?

100% of firms believe that CFP professionals help differentiate their business.

100% Yes, 63% vs. No, 37%

• 88% of firms indicated that CFP

professionals (in general) generate higher levels of revenue than advisors without CFP certification… • … and 63% of firms saw an increase in business revenue from CFP professionals, compared to those without CFP certification.

SPRING 2014 – 5


ETHICS CORNER

WHEN THINGS AREN’T SO BLACK AND WHITE BY LEONA TRANTER, CFP , LL.B DIRECTOR, STANDARDS & ENFORCEMENT, FPSC ®

Ethics Corner presents scenarios developed from practice-based inquiries FPSC has received from CFP professionals. We’re interested in what you would do if presented with this situation. Read the scenario and take a moment to submit your brief response to fpstandard@fpsc.ca (subject line: Ethics Corner). All those who submit a response will be entered into a draw for a chance to win a $25 gift card. In an upcoming issue of FP Standard we will review some of your responses and we will provide our views on the ethical issues arising from the case related to the FPSC Code of Ethics.

Looking after Eloise’s Accounts

What are the key issues raised by this case?

Eloise meets with Raymond, a financial planning professional, to discuss her accounts. Eloise is about to turn 70 and has been struggling with managing her finances since her husband passed away. She is considering adding her son to her accounts to make things easier if her cognitive abilities decline, or in the event of her death.

1. Should Raymond and Peter have discussed Eloise’s and Sam’s personal matters? Does this happen in your office? What are the related procedures and policies in your organization?

Eloise currently has $6,000 in her chequing account and $39,000 in a savings account. Her investments include a RIF that was transferred to her name from her husband’s RRIF, valued at $264,000 and a non-registered GIC worth $67,500 maturing at the beginning of next year. Sam, Eloise’s son, is a client of Peter, another financial planning professional at Raymond’s firm. In discussing this situation with Peter, Raymond learns that Sam has had some bad debt write-offs in the past, believed to have been brought on by a gambling addiction that is now under control. Sam’s credit has been good for the last couple of years. Sam is Eloise’s only child and she wants all of her funds to pass to him on her death. Raymond cautions her that since Sam has “had some financial difficulties in the past” it is a risk for her to add him as a joint owner of her accounts.

SPRING 2014 – 6

2. Given that Raymond now knows of Sam’s prior gambling issues, as her advisor, should he relate this information to her? Does he have an obligation to Sam as “a client of the firm” to maintain his privacy/confidentiality?

Raymond reminds Eloise that her rent has been coming out of her account on a pre-authorized basis, so that could not be part of the cash withdrawals. Delving deeper, Raymond decides to review Sam’s accounts. He notices cash deposits on approximately the same dates and for similar amounts as the withdrawals. Raymond is suspicious about this ‘coincidence’ and schedules a meeting with Sam.

What key issues does this new information raise?

3. Is a joint account the only/best option for addressing Eloise’s concerns about her future?

1. Should Raymond have accepted Eloise as a client, given that her son was already his client?

Alternative Scenarios

2. To whom is Raymond obligated in this matter? Is he equally obligated to both Sam and Eloise? How can he put the interests of both clients first?

Now, what if the scenario changes? Eloise meets with Raymond to discuss her accounts. She was referred to him by her son Sam, who has been Raymond’s client for several years. She has noticed some odd withdrawals from her account and she thinks there should be more money in it. Eloise previously made Sam her Power of Attorney (POA). The POA is on file and has been previously validated by Raymond. In reviewing her account, Raymond notices that numerous ATM and Point of Sale withdrawals have been made from Eloise’s account. Eloise says that she did not make the withdrawals, but suggests that perhaps Sam did, in order to pay for her rent and medications. She reminds Raymond that Sam is handling all of her bills now and that she gave him her debit card and PIN.

3. What are Raymond’s obligations if he believes the Power of Attorney is being abused? 4. Should he speak with Sam about his concerns? 5. What are your firm’s policies and procedures in cases of suspected financial elder abuse or misuse of authority under a POA?


SUDBURY WOMAN NAMED WESTERN HEMISPHERE’S BEST FINANCIAL PLANNER CHANGE TO CONTINUING EDUCATION REQUIREMENT Effective January 1, 2015, CFP® professionals and FPSC Level 1 Certificants in Financial Planning™ will be required to complete a minimum of one hour of Continuing Education (CE) each year that is linked to the FPSC Code of Ethics, FPSC Rules of Conduct and/ or FPSC Financial Planning Practice Standards. This requirement is designed to ensure that CFP professionals and FPSC Level 1™ certificants review and remain current in the application of FPSC’s Standards of Professional Responsibility for CFP Professionals and FPSC Level 1 Certificants in Financial Planning, to which they agree to adhere as a condition of certification. More information regarding qualifying CE in this category will be forthcoming on our website and your FPSC Online Dashboard.

SANDRA MEWS, A CERTIFIED FINANCIAL PLANNER® FROM SUDBURY, HAS WON FIRST PLACE IN THE PLANPLUS GLOBAL FINANCIAL PLANNING AWARDS FOR NORTH AND SOUTH AMERICA.

Courtesy of NorthernLife.ca (February 14, 2014) When Mews helped a struggling mother reclaim her life after a messy divorce, she never dreamed of the international acclaim that would follow, a news release issued this week stated. The unique approach Mews took to get a divorced mother back in control of her finances won her first place in the competition, although it was tough. More than 100 financial planners from eight countries submitted case studies on everything from tax to estate planning. After a rigorous round of personal interviews, the judges chose Mews as the top financial planner for North and South America. “I always focus on the needs of my clients before anything else,” says Mews in the release. "It’s not always just about the money. It’s about options — and choices. I knew if I provided her with some financial options and guidance this hard-working mom could get her life back on track.”

Now Sandra will be turning her considerable skills to helping about 100 laid-off workers in Iroquois Falls. Sandra will be donating her time there to hold individual counselling sessions with the workers Feb. 18, helping each design a financial strategy without charging consulting fees. “When I heard about the layoffs at the Resolute Forest Products Mill, I just knew I’d offer my services,” Mews said. “These people’s lives have been turned upside down. I want them to know there are options — there are things they can do to help them get through this tough time.” Mews says she gets great satisfaction from helping people achieve their dreams and build secure futures. Her father, a business owner, died young, leaving Mews' mother with four children and huge debts. “It was a very difficult time for our family,” she says. “We had no one to help us figure out what to do. I want people to know … it doesn’t always have to be a desperate situation.” Mews is a Certified Financial Planner® through the Canadian Financial Planning Standards Council. She has been in the industry more than 20 years.

SPRING 2014 – 7


THE IMPAIRED CLIENT

NEGOTIATING MEMORY'S SLIPPERY SLOPE BY KAREN VAN ZINO, M.D. CLINICAL MEDICINE INSTRUCTOR, STANFORD MEDICAL SCHOOL PERSONALIZED MEDICAL CONSULTANT AND COACH THE HUMAN BRAIN HAS AN IMMENSE CAPACITY FOR CHANGE—WHAT IS TERMED NEUROPLASTICITY, OR THE PLASTIC BRAIN. THIS IS EVEN SO AS WE AGE. AN ESSENTIAL POINT, A POINT SO MANY ARE UNAWARE OF, IS THAT IN THE EARLY STAGES OF MEMORY LOSS THE OPPORTUNITY EXISTS TO SLOW DOWN THE PROCESS OR PERHAPS EVEN HALT IT ALTOGETHER.

We all begin to experience what is termed Age Appropriate Memory Impairment (AAMI) usually by our early 50s, if not before. It may look like this: “Now what was his wife’s name? I just met her last night.” At some point most of us will experience a further memory impairment which becomes noticeable as more than just a senior moment. This is termed Minimal Cognitive Impairment (MCI). We may find that now we really can’t remember items that are affecting our everyday life. Perhaps it might be something like missing a scheduled appointment that was confirmed the day before. It will feel like something more severe. While no one noticed the AAMI, this is noticeable. The good news is that in this critical period a proper evaluation may reveal a treatable cause (severe sleep apnea, for example) and it is here that we can call upon, through exercises, improved hearing, and possibly medication, the plasticity of our brain to sharpen like a blurry slide coming into focus.

SPRING 2014 – 8

The curve from MCI to Alzheimer's Disease is like going from gently walking down a hill to running full speed out of control. While eventual progression to full-blown dementia may not be avoided, slowing this progression can often be achieved.

COGNITIVE FUNCTION

Financial planners are in a unique position to recognize cognitive change in their clients and open a discussion, a discussion which may indeed feel daunting, but which can lead to early intervention.

Age Appropriate Memory Impairment Minimal Cognitive Impairment Alzheimer's Disease

TIME

Can we recognize these changes? Yes, if we know what to look for and we pay attention to the little red flags—perhaps coming to an appointment unprepared or asking the same question repeatedly. Recognizing our own fears around this unsettling topic is important so that we do not, through avoidance or ignoring what we see, miss the opportunity to broach this sensitive subject. We could begin the conversation with something like “I’ve noticed you seem to be having some difficulty with your memory.” This simple question can open the door for the fearful client.

This may also be a time when long-term care insurance is sought. Teaching a client a simple tool to memorize 10 random words by making a story out of them can make the difference between passing the insurance company’s medical or not.

The 10 Words • • • • •

Plank Banker Sauce Umbrella Abdomen

• • • • •

Reptile Lobster Orchestra Forehead Jury

The orchestra leader was going to dine with the banker when it started to rain so he put up his umbrella and had to walk a plank over a large puddle. When he arrived he was served reptile with lobster sauce which made his abdomen ache. He left scratching his forehead thinking "the jury is still out on this one!"

The opportunity is there. The implications for confronting the cognitive loss at the earliest opportunity are startling, both from a professional responsibility as well as an ethical perspective. Trust your observations and follow your intuition, for the benefit of both your client and yourself.


BUILDING EXAMINATIONS THAT MATTER

PART 3: EXAMINATION ADMINISTRATION BY DEREK DEDMAN, CFP®, CFA TECHNICAL CONTENT EXPERT, FPSC

In the first two parts of our series on examination administration, we reviewed development of content for examinations and followed the journey of examination items as they go through rigorous, multi-level expert review. In Part 3, we will take a look at what it takes to successfully administer the two examinations required for CFP certification, the gold standard in financial planning. The FPSC Level 1 Examination in Financial Planning™ and the CFP examination (formerly FPE1 and FPE2) are administered twice a year at approximately 40 computerbased testing facilities throughout Canada. The examinations are administered using a custom software platform. Candidates can orient themselves with the software prior to examination day through an online tutorial or by purchasing a practice examination.

Here’s the Plan

The administration of the examinations is governed by clearly defined and strictly enforced examination administration policies and procedures set forth in the Guide to Examinations for CFP Certification. Required reading for all examination candidates, the Guide outlines every aspect of the examination, including how to prepare, what to expect at the examination site and how examinations will be scored. To maintain the integrity and value of the examination process—and therefore ensure the integrity and value of CFP certification— the same strict policies and procedures are followed at every testing facility across the country. After completing the examination, candidates are given the opportunity to provide feedback to FPSC about the administration,

from registration to examination day. Feedback and comments are also collected about the content, level of difficulty, and time allowed for completion of the examination. All comments are thoroughly reviewed and considered to ensure that every examination continues to be fair, valid and reliable. In the next issue of FP Standard, we will look at the next step in the examination process, including the psychometric processes necessary to ensure an accurate assessment of examination results. If you missed the previous articles in our “Building Examinations that Matter” series, read them here: • Part 1: Creating the Perfect Question (Spring 2013 issue, page 12) • Part 2: The Journey to the Exam (Fall 2013 issue, page 10)

As a CFP® professional, you’ve earned the right to these key resources. You’ve already achieved the gold standard in terms of financial planning. But have you made sure your clients and potential clients understand the value of your CFP designation? On the FPSC website you’ll find a Marketing Toolkit that can help you communicate how your CFP credential benefits your clients—and differentiates you from other financial planners. Here you'll find many practical resources, such as our Here's the Plan brochure and presentation that you can use to demonstrate the value of a financial plan and instil confidence in your clients' decision to deal with you as a CFP professional. Be sure to take advantage of these important, highly useful resources. They’re only a click away.

fpsc.ca/cfp-professional-toolkit SPRING 2014 – 9


ENHANCEMENTS TO THE PATH TO CFP® CERTIFICATION

INTRODUCING FPSC LEVEL 1 CERTIFICANT IN FINANCIAL PLANNING™ BY ISABELLE GONTHIER , PHD DIRECTOR, CERTIFICATION PROCESS & EXAMINATIONS, FPSC

As of July 1, 2014, the FPSC Level 1 Certification in Financial Planning™ will replace the FPSC Registered Candidate status on the path to CFP certification. Following successful completion of the first examination, the FPSC Level 1 Examination in Financial Planning™ candidates will be eligible to apply to become an FPSC Level 1™ Certificant. This new certification encourages individuals who are working in roles that offer financial planning strategies or solutions to clients with less complex financial planning needs, but who currently have limited or no professional financial planning qualifications, to pursue a financial planning qualification along the path to CFP certification. FPSC Level 1 certificants are required to attest to the same standard of care, ethics and professional responsibility to their clients as a CFP professional does. They are also required to maintain their competence by meeting annual Continuing Education requirements in order to renew their certification.

SPRING 2014 – 10

Attainment of FPSC Level 1 certification is also confirmation of readiness to move forward on the path to CFP certification. It provides candidates with a meaningful recognition of their accomplishments and the distinction of a certification, allowing candidates to better promote themselves to clients and with employers. FPSC Level 1 certificants receive a certificate affirming their success and their commitment to abide by the Standards of Professional Responsibility for CFP Professionals and FPSC Level 1 Certificants in Financial Planning. Concurrent with this change, we are also introducing new Routes to CFP Certification that offer various exemptions for individuals who already hold relevant financial planning qualifications or other relevant professional qualifications. These exemptions streamline and expedite the path to CFP certification for those who have previously attained prior qualifications, while maintaining the rigour of the CFP designation.

Changes have also been made to the names of the examinations. The first examination on the path to CFP certification is now called the FPSC Level 1 Examination in Financial Planning (formerly Financial Planning Examination Level 1 or FPE1®). The second and final examination along the path to CFP certification is now called the CFP examination (formerly Financial Planning Examination Level 2 or FPE2®). The content and structure of the examinations and all study materials remain unchanged. Please visit our newly redesigned website at fpsc.ca for more detailed information on the enhancements to the path to CFP certification.


WHAT ADVISORS NEED TO KNOW ABOUT FINANCIAL/ RETIREMENT PLANS BY ELLEN BESSNER, LLB PARTNER AT BABIN BESSNER SPRY LLP

Ellen joined Ed Babin and Cynthia Spry to form Babin Bessner Spry LLP in 2014 after over 20 years of practising litigation at prominent law firms Gowlings and Cassels Brock. Ellen's broad ranging litigation practice includes acting for corporations and individuals in commercial litigation, regulatory defence, professional liability, securities class action proceedings, and employment disputes. She has developed a special niche representing public issuers, investment dealers, mutual fund dealers, Portfolio Managers, compliance officers, branch managers/supervisors, and advisors in Ontario courts of all levels and at various regulatory tribunals, including IIROC, MFDA, OSC and FSCO. She has also developed an expertise advising directors and senior officers in respect of company and personal risk. HERE ARE SOME IMPORTANT LESSONS ARISING FROM A RECENT MANITOBA COURT OF APPEAL DECISION (GIESBRECHT V. CANADA LIFE ASSURANCE CO. ([2013] M.J. NO. 169, [MAN. C.A.]).

Like many investors, Mr. and Mrs. Giesbrecht wanted to know, based on their present income, assets, liabilities and retirement expectations, when they could retire. The Giesbrechts knew that they could make ends meet with $35,000 per annum expecting to live to age 90. They provided their information to the insurance agents, who analyzed their financial situation and prepared a two-page letter and two pages of calculations (the Plan). The letter explained that what followed were “some suggestions regarding your upcoming retirement ...” and concluded with: “The attached RRIF illustration is the result of these calculations on all of these charts ... we are using for the purpose of these illustrations the assumptions as follows:”. Further, the letter suggested that if the clients wanted to follow the Plan, they ought to gather the savings they had to invest according to the Plan, which included certain sums of money that the clients stated they had saved and set aside.

They stopped working prematurely and did not bank the money on the sale of their home. Several years later, it became clear to the Giesbrechts that they were going to run out of money so they found jobs that paid them far less than they had previously made. They sued the agents for their loss of income.

The Giesbrechts tucked the Plan away in a drawer and did not engage in the discipline of following it to meet their retirement goals.

2. Credibility is critical, playing a substantial role in the decision of both the Trial Judge and the Court of Appeal Judges;

The Trial Judge found in favour of the Giesbrechts, concluding that the agents failed to fulfill their obligations. The Manitoba Court of Appeal overturned the Trial Judge’s decision, concluding that the Giesbrechts’ damages were a result of their own decisions that were inconsistent with the advice set out in the Plan. What can agents and advisors learn from this decision? 1. Plans are living, breathing documents as they are a reflection of clients’ changes in values and circumstances;

3. The choice of language in a plan is important so that “assumptions” and “illustrations” are not misinterpreted as facts or guarantees and; 4. Every Advisor or Agent preparing a plan for clients, regardless of whether or not they hold the CFP® designation, may be held to the standards set out by both the Conduct and Practices Handbook (IIROC) and Financial Planning Standards Council. Service clients by answering their questions about retirement, but ensure that the language of any plan clearly identifies that this is a document that needs to be regularly updated, and that delineates the assumptions and the illustrations as such. Ensure the document sets out the limitations of the plan so clients understand the assumptions made and discipline they must follow to meet their goals. Whatever you do, don’t let clients tuck their plans into a drawer – insist that you review it with them regularly.

SPRING 2014 – 11


WHAT’S HAPPENING @ FPSC_CANADA May 2014: The Financial Planning Examination Level 2 (FPE2®) Practice Exam is available for the first time for those who have registered for the June examination sitting. The Financial Planning Examination Level 1 (FPE1®) Practice Exam is also available. June 6, 2014: FPE1 and FPE2 take place across the country in various locations. July 2014: FPSC Registered Candidates automatically become FPSC Level 1 Certificants in Financial Planning™. July 2014: The new Routes to CFP® Certification are available to qualified applicants. Find out more at fpsc.ca. August 18-22, 2014: Item writing workshops with CFP professional volunteers are held in Montebello, Quebec.

September 2014: FPSC’s national consumer awareness television campaign begins on various Rogers TV stations. The television campaign is also scheduled to run during the months of November 2014 and February 2015. September 2014: CFP Professional Ambassadors head back into Core Curriculum classrooms across the country to educate students on the value of the CFP designation. To book an Ambassador for your school, email candidates@fpsc.ca. November 16-22, 2014: Canada declares 6th Annual Financial Planning Week to coincide with Financial Literacy Month.

November 19, 2014: CFP professionals gather for a full day of Continuing Education at the 2014 Toronto Financial Planning Week Symposium at the Arcadian Court. Watch fpsc.ca for more information. November 21, 2014: CFP professionals gather for a full day of Continuing Education at the 2014 Vancouver Financial Planning Week Symposium and Reception at the Pan Pacific Vancouver. Watch fpsc.ca for more information. November 28, 2014: The winter administration of the FPSC Level 1 Examination in Financial Planning™ and the CFP examination are held at various locations across Canada.

November 18, 2014: FPSC’s Celebration of the Profession dinner is held in Toronto at the Arcadian Court in conjunction with Financial Planning Week.

YOU CAN HELP SHAPE THE CANADIAN FINANCIAL PLANNING LANDSCAPE The Financial Planning Foundation is a charitable organization that is committed to developing and promoting financial planning research and education for the benefit of financial and allied professionals, education providers and the Canadian public.

Support the Foundation today. fpfoundation.ca

SPRING 2014 – 12


LOOK

FOR THIS

SYMBOL as Assurance of FPSC速-Approved CE Activities and CE Credits. Approved Providers as at May 1, 2014 Hahn Investment

Responsible Investment Association

Independent Financial Brokers of Canada

Seminar Partners

Advisor.ca Agenomics

ILS Learning Corporation

Age-Friendly Business

Institute for Divorce Financial Analysts

Tabuchi Law Offices

Invesco Canada Ltd

Ten Star Financial

Ivey Business School

The Heritage Institute Canada

Jarislowsky Fraser Limited

The Money Finder

Knowledge Bureau

The Private Capital Markets Association of Canada

Academy of Financial Divorce Specialists

AGF Investments Inc. Bridgehouse Asset Managers Business Career College Canadian Institute of Certified Executor Advisors Capital Consulting

Learning Partner

CE Network

Mackenzie Financial

Centre for Employee Benefits

McCague Borlack LLP

CGA-PD Net

Medaxio

The Canadian Institute of Financial Planners

Mindpath Financial Conferences

Clear Path Media

Smarten Up Institute STEP Canada

Vision Systems Corp. Wardell Worldsource Financial

My Money Mindset

CLIFE

National Exempt Market Association

ASSESSED.

Convention Business Travel

NPC

Dalhousie

Oliver's Learning

APPROVED.

ERAssure

Parley Consulting

ES Computer Training

Phoenix Coachingworks Inc.

Foran

Radius

Gobeil and Associates LTD

RBC Royal Bank

ASSURED. For more information visit: fpsc.ca/approved-ce-credits


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FP Standard - Spring 2014  

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